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PHILADELPHIA, Pa. — Rohm and Haas Co. has announced that it has embarked on an effort to streamline its organizational structure, work processes, manufacturing and non-manufacturing resources in order to enhance its financial performance. Chairman and CEO Raj Gupta reaffirmed the company’s growth strategy and reported that senior officials have determined this is an appropriate time to examine the company’s entire cost structure.
“The external economic environment of the last 12 months has sharpened our resolve to make Rohm and Haas a less complex company,” Gupta said. “Soaring costs of hydrocarbon-based raw materials – and energy – have slowed demand in the marketplace to levels last seen 18-24 months ago. This has especially affected the Performance Polymers Business Group. A sharp decline in the electronics industry also has impacted our performance. We have the right technologies, global network and business portfolio for long-term success, but the structural changes in our markets make it imperative we adjust the way we do business. Reducing the fixed costs of our business, combined with relief from raw material costs – and achieving needed price increases – are imperative at this time. We will become more agile, more focused and better positioned to leverage our strong market positions and technology base for growth across our portfolio,” he said.
The repositioning effort at Rohm and Haas will consist of:
- Ensuring substantial investment for infrastructure improvements and the research initiatives for targeted growth businesses, which include architectural and powder coatings, consumer and industrial specialties, electronic materials, as well as adhesives and sealants.
- An aggressive and across-the-board campaign to eliminate fixed costs embedded in the organization. This will entail the rationalization of excess capacity, consolidation of offices and labs, and examination of the future role of marginal business segments or product lines. Rohm and Haas announced last week the restructuring of its Printed Wiring Board (PWB) business in North America, the decision to exit the Liquid Polysulfide Sealants business (see sidebar), and the closing of a production unit in Kankakee, Ill. When these and numerous other initiatives are complete, they will yield a minimum of $200 million (and potentially larger) annual operating savings by the fourth quarter 2002.
- An organizational structure with more tightly focused global businesses, clearly differentiated business models and regional growth strategies. Each business will have the physical resources, support services and enhanced accountability for their performance. This will ensure immediate revenue growth coincident with the economic recovery in their respective markets.
The company indicated these efforts are likely to result in the loss of some 6% to 7% of the jobs in its worldwide workforce of 18,000. At the end of the second quarter, the company will report the conclusions reached during this repositioning effort along with a more complete estimate of annual profit improvement. For more information, visit www.rohmandhaas.com.